Do You Pay Sales Tax on Used Heavy Equipment in Pennsylvania? (Dealers, Auctions and Private Sales)

You win a used excavator at a Pennsylvania auction for $40,000, the buyer’s premium adds $2,000, and the invoice adds another $2,520 on top. That last line is PA sales tax, and it is charged on the premium too. Buy the same machine from a neighbor, on a farm, or across the state line in Maryland, and the answer changes.

This guide covers PA sales tax on heavy equipment in each situation buyers actually run into: dealers, auctions, private sales, trucks and trailers, farm equipment, contractors, and machines that cross the state line. We link each rule to the regulation or Department of Revenue page it comes from, so you can show your accountant.

Do you pay sales tax on used equipment in Pennsylvania? The short table

Find your situation; each row is explained below.

How you buy	Is PA tax due?	Who handles it
From a PA dealer	Yes, unless you give an exemption certificate	Dealer collects it on the invoice
At an auction held on the auctioneer’s premises	Yes, on hammer price plus buyer’s premium	Auctioneer collects it
At an on-site sale for an owner who does not regularly sell equipment	Generally no (an “isolated sale”)	Nothing to collect; confirm with the auctioneer
Private sale of untitled equipment by someone not in the business	Generally no (isolated sale)	Ask PA DOR if the seller’s status is unclear
Titled truck or trailer	Yes	Paid with the PennDOT title paperwork (Form MV-4ST)
Bought out of state, brought into PA	Yes, as use tax, with credit for tax paid to some states	You report it to PA DOR
Bought in PA, seller ships it out of state	No	Seller keeps the shipping records
Bought in PA, you pick it up and haul it out	Yes	Seller collects it

What is the rate? 6%, 7% or 8%

The state rate is 6%. On taxable sales to customers in two places, vendors also collect a local tax: 1% in Allegheny County (7% total) and 2% in Philadelphia (8% total). Everywhere else in Pennsylvania, it is 6%.

Local tax now follows the machine, not the seller. The Department of Revenue’s local sales tax page says it used to depend on where the vendor was and now depends on where the item is delivered, with enforcement starting October 1, 2026. A loader delivered to a yard in Allegheny County should carry 7%, even if the dealer is in Butler County.

Buying from a dealer

A Pennsylvania dealer adds sales tax to the invoice and sends it to the state; if you are exempt, you hand over an exemption certificate instead. Our guide to used heavy equipment dealers in Pennsylvania lists them by region.

When you weigh a dealer price against an auction, compare totals: dealer price plus tax against hammer plus premium plus tax. Our price guides for used excavators, skid steers and compact track loaders show what Pennsylvania dealers ask.

Sales tax on equipment auctions in PA: is the buyer’s premium taxed?

Yes. Pennsylvania’s regulation for auctioneers, 61 Pa. Code § 31.23, says the tax is computed on the total purchase price of each transaction “without deduction for the auctioneer’s commission”. Auction terms we have read, such as McGrew’s and Purple Wave’s, define the purchase price as hammer plus premium, so the premium is taxed with the machine. Here is the math on a $40,000 hammer price with a 5% premium (illustrative numbers):

Where the tax applies	Hammer + premium	Tax	Total
Most of PA (6%)	$42,000	$2,520	$44,520
Allegheny County (7%)	$42,000	$2,940	$44,940
Philadelphia (8%)	$42,000	$3,360	$45,360

Premiums vary from capped fees to tiered rates; our guide on how the buyer’s premium works shows real Pennsylvania terms and how to work back from your budget to a maximum bid.

Who collects the tax at an auction

The same regulation sets out who collects:

• Sales on the auctioneer’s own premises (a consignment yard or sale barn): the auctioneer collects and remits the tax, even when the equipment belongs to someone else, and even when the owner lives out of state.
• Sales elsewhere, for an owner who regularly sells that kind of property: the auctioneer acts as the owner’s agent, and the owner is responsible for the tax.
• Sales elsewhere, for an owner who does not regularly sell that kind of property: the regulation says these transactions “are not taxable”. A retiring farmer’s dispersal on the home farm can fall here.

That third case surprises people, so ask the auctioneer before sale day whether tax will be charged. It does not cover repossessed equipment: the isolated sales rule in 61 Pa. Code § 32.4 names “the sale of repossessed property by a finance company” as part of a business, not an isolated sale, so expect tax on lender-owned units.

Private sales: when no one collects the tax

Pennsylvania treats “infrequent sales of a nonrecurring nature made by a person not engaged in the business of selling” as isolated sales, listed in the exemptions chapter of the sales tax rules. One example in the regulation is used machinery and equipment sold by a business that does not sell those items in its regular course of business. A paving company selling its old skid steer, or a landowner selling the backhoe from a finished project, looks like that case.

Watch for three catches:

• The seller is really a dealer. Someone who buys and resells machines regularly is in the business, even from a back lot, and should collect tax.
• Vehicles that must be registered, such as trucks and trailers, are excluded from the isolated sales rule. See the next section.
• The purchase was taxable but nobody collected the tax. Then you owe it yourself. The use tax regulation, 61 Pa. Code § 31.7, says use tax is also incurred on purchases within Pennsylvania “if tax is not paid to the vendor”.

If you cannot tell whether a seller counts as “in the business”, ask PA DOR, and keep a bill of sale with the seller’s name, date, serial number and price. Selling a machine yourself? Our guide on how to sell used heavy equipment compares dealer, consignment and private sale.

Trucks and trailers: tax is paid through PennDOT

A dump truck, lowboy, tag trailer or truck tractor is registered under the Vehicle Code, so its tax goes through the title paperwork. PennDOT’s form is the MV-4ST, Vehicle Sales and Use Tax Return/Application for Registration, which PennDOT says is “only available from authorized agents of PennDOT”, the tag and title offices found in most towns. Two more points:

• You cannot use REV-1220 for a vehicle. The certificate itself says not to use it to claim an exemption on vehicle registration; that goes through PennDOT forms MV-1 or MV-4ST. And the farming exemption “is not valid for vehicles that are required to be registered under the Vehicle Code”. A farm truck is taxed.
• A low price can be checked. PennDOT warns that additional sales tax may be due when a vehicle’s purchase price is significantly lower than fair market value, and that the Department of Revenue can review the transaction.

Truck titles are the paperwork that runs late most often after an auction; our guide to buying at an equipment auction covers what to expect.

PA farm equipment sales tax exemption: REV-1220

Pennsylvania exempts machinery and equipment used directly in farming. The farming regulation, 61 Pa. Code § 32.33, applies the exemption when the property “is predominantly used directly by him in farming operations”, and spells out what predominant means: the farmer uses the property “more than 50% of the time directly in farming operations”.

Generally exempt (when used predominantly in farming)	Taxable
Seeders, planters, plows, harrows, cultivators, sprayers	Vehicles that must be registered, plus their parts and supplies
Harvesters, combines, binders, forage blowers, milking equipment	Equipment used in general cleaning and maintenance of farm property
Replacement parts for exempt machinery	Equipment used for building or repairing barns, fences and other real estate
Fuel and lubricants used in exempt equipment	Equipment used for land clearing, landscaping, forestry or land reclamation

To claim it, give the seller a completed Pennsylvania Exemption Certificate, Form REV-1220, and check reason 1, “used directly and predominately by purchaser in performing purchaser’s operation of”, box E, Farming. What the form says about the paperwork:

1. Timing: the seller must have it within 60 days of the sale. Bring it to registration.
2. Unit or blanket: “unit” for one purchase, “blanket” for a dealer or auctioneer you buy from regularly.
3. Who keeps it: the seller, for at least four years. Do not send it to the Department of Revenue.
4. Honesty: misuse “is punishable by fine and imprisonment”.

❌ Wrong: “I farm, so the skid steer is exempt”, when it will spend most of the year grading driveways for paying customers.

✅ Right: “This skid steer will feed cattle and handle crops most of the time. I am checking box E and keeping a log of its use.”

Our guide to farm equipment auctions in Pennsylvania lists the monthly sales, dispersals and mud sales where most used tractors change hands.

Dealers buying for resale

A dealer buying a machine to resell does not pay tax on it. REV-1220 covers this too: reason 3, property “will be resold or rented in the ordinary course of purchaser’s business”, with the buyer’s 8-digit PA Sales Tax License ID (without one, the buyer explains why under reason 8). Tax is collected later, when the machine sells to its end user.

Run a used equipment business? You can list your equipment on Heavy Listing.

Contractors pay tax on the equipment they use

Construction contractors do not get an exemption on their own machines. The contractor regulation, 61 Pa. Code § 31.12, says a contractor “shall pay tax upon all tools and equipment, such as backhoes, cranes, saws, drills, motor vehicles, and the like” used in construction work. The farming exemption does not help either: REV-1220 excludes property used in constructing or repairing real property, and § 32.33 excludes land clearing and landscaping.

Out-of-state contractors working here have their own rule, 61 Pa. Code § 46.7: equipment brought in from elsewhere is exempt if used here 7 days or less; after that, use tax applies, with credit for another state’s tax only where that state returns the favor.

Buying equipment out of state and bringing it into PA

Pennsylvania buyers shop Maryland, Ohio and online auctions all the time. If you skip PA tax at the sale, use tax catches up when the machine arrives. Under § 31.7, a Pennsylvania buyer owes use tax “whether the purchaser brings it into the Commonwealth himself or has it shipped to him”.

• Credit: sales tax paid to another state counts only if that state “grants substantially similar tax relief”. Ask PA DOR before assuming yours does.
• Older machines: bought 6 months or more before first use here, you may elect to pay on fair market value (Form PA-3).
• Relocating a business: no use tax on equipment bought more than 6 months before it came in or the business was set up, except equipment brought in temporarily for a construction contract.

How to report it, per the Department of Revenue’s use tax for businesses page:

• Licensed for sales tax: line 6 of your sales and use tax return in myPATH.
• Not licensed: the online PA-1 Use Tax Return at mypath.pa.gov, due by the 20th of the month after the purchase. (The once-a-year PA-40 route for individuals “cannot be used for business purchases”.)

Unpaid use tax gets assessed with penalty and interest, per the Department’s use tax page.

Out-of-state buyers: hauling a machine out of PA

For buyers from New Jersey, Ohio or West Virginia, the delivery point decides. Under the multi-state sales rule, 61 Pa. Code § 32.5:

• The seller ships it out, delivering it outside Pennsylvania or to a carrier for transport out of state: no Pennsylvania sales tax. The seller keeps the bill of lading or similar delivery records.
• You or your hauler pick it up in Pennsylvania: the tax applies, “notwithstanding that the buyer or lessee may subsequently transport the property out of this Commonwealth”. Delivery to your agent counts as delivery to you.
• Trucks and trailers sold to a nonresident for use outside Pennsylvania are not taxed if they are registered in another state within 20 days after delivery.

Hauling it home yourself? Budget for Pennsylvania tax and ask your own state about a credit.

Common mistakes

• ❌ Setting your maximum bid as if tax applied only to the hammer price. ✅ Tax goes on hammer plus premium, so divide your budget by 1.06 (or 1.07, 1.08) first.
• ❌ Handing over the REV-1220 after the invoice prints. ✅ Bring it to registration.
• ❌ Using the farm exemption for a farm truck. ✅ Registered vehicles are taxable; tax goes through the MV-4ST.
• ❌ Assuming a cash deal with a “guy who sells machines” is tax-free. ✅ If he is in the business and skips the tax, use tax may land on you.
• ❌ Buying in Ohio or Maryland and forgetting about it. ✅ Report use tax on the PA-1 by the 20th of the next month, minus any credit you qualify for.
• ❌ Picking up a machine in PA and expecting no tax because you live out of state. ✅ Only seller-arranged shipment out of state avoids PA tax.

Upcoming equipment auctions in Pennsylvania

These are the next equipment sales on our calendar. Check each sale’s terms for the premium and how it handles exemption certificates:

The bottom line

On PA sales tax for heavy equipment, the default answer is yes: 6% (7% in Allegheny County, 8% in Philadelphia) on dealer and auction purchases, premium included. The legitimate ways out are narrow: farm machinery used predominantly in farming, purchases for resale, true one-off sales by someone not in the business, and machines the seller ships out of state. Trucks and trailers pay through PennDOT. If a taxable purchase slipped through untaxed, file the use tax return before the Department sends the bill with penalty and interest.

This article is general information, not tax advice. Rules change and your situation may differ. For a specific purchase, check with a CPA or the Pennsylvania Department of Revenue.